The pertinent ethics considerations involve lawyer referral service regulations, fee sharing, payment of referral fees, and advertising rules. Most importantly, Business and Professions Code Section 6155 regulates lawyer referral services. California’s regulatory scheme defines permissible parameters, and out-of-state ethics opinions, although not binding in California, provide guidance regarding problematic areas.1
Lawyer referral service regulation. Lawyer referral services are regulated by the State Bar of California.2 Whether an online legal "matching Web site" qualifies as a lawyer referral service depends upon its design and functionality. If the service operates directly or indirectly for the purpose of referring potential clients to lawyers, it falls within California’s lawyer referral service rules and regulations (LRS Rules) whether or not the term “referral service” is used.3
Individuals and entities are prohibited from operating lawyer referral services unless they meet LRS Rules,4 including certification by the California State Bar.5 The LRS Rules regulate the ownership, supervision, organization of the panel of lawyers for a lawyer referral service, fees, and referral procedures.
Lawyers are prohibited from accepting referrals from uncertified lawyer referral services.6 While lawyer panel members may pay a registration fee, referral fee, or percentage fee,7 the combined charges to potential clients may not exceed the total cost that the client would pay if no referral service were involved.8
Most ethics opinions conclude that legal online "matching services" will be regarded as lawyer referral services if they purport to assess the legal needs of the consumer to match the potential client with a qualified attorney.9
It is the professed selection and recommendation of lawyers that is said to distinguish the lawyer referral service from a "directory" describing an attorney’s qualifications.10 The exercise of independent judgment by an uncertified online service provider regarding the referral of a client to a lawyer is prohibited,11 as are limitations on the number of attorneys in a particular area of specialty or geographic area.12 Internet services that do not involve the exercise of discretion except by an automated process performed by computers are less likely to be regarded as lawyer referral services subject to heightened regulation.13
Under California law, advertisement by a lawyer referral service must disclose whether attorneys on the referral list paid consideration—other than a proportional share of the actual cost—to be included on the list.14 Such advertising must also include the State Bar certification number of the lawyer referral service.15 If a referral Web site qualifies as a lawyer referral service but is not certified, a lawyer may not participate unless the service receives certification.16
Fee sharing. While lawyers may pay registration, referral, or participation fees to lawyer referral services established and operated in accordance with California’s LRS Rules,17 generally lawyers may not share legal fees with persons who are not lawyers, directly or indirectly.18 Lawyers cannot promise payment in exchange for a recommendation or for securing employment by a client.19 Lawyers may make a gift to someone who has referred legal business to the lawyer, provided there is no promise to do so or to make future referrals.20 However, Rule 1-320 does not preclude payment for advertising.21
Advertising. California regulations concerning lawyer advertising generally cover advertisement regarding the availability of legal services, including electronic communications.22 While nonprofit lawyer referral services are exempt from certain advertising provisions of the State Bar Act,23 for-profit lawyer referral services are covered, including online referral services, which may include online directories charging membership or registration fees based on a percentage of legal fees earned by referrals.24 Restrictions on false, misleading, or deceptive advertisement also are applicable,25 as are rules prohibiting solicitation.26 Attorneys identified as “specialists” must hold current certifications.27
Out-of-state ethics opinions provide that attorneys who participate in Web sites that are deceptive or misleading to consumers violate ethics rules governing lawyer advertising.28 The Web site must “make the methodology for the selection of the attorney’s name clear.”29 Referral Web sites should also disclose the attorney’s purchase of exclusive rights to a geographic area.30 Statements implying that attorneys are selected based on experience are also improper.31
Where the Web site qualifies as advertising rather than a lawyer referral service, payment of enrollment fees,32 annual payments, and payments per “click” or “hit” have been found permissible as payments for advertising when not linked to the establishment of the attorney-client relationship.33 Online service providers are prohibited from enabling direct contact with clients in violation of solicitation restrictions until the client first contacts the lawyer.34
Careful attention to the structure and status of lawyer referral services, online attorney-client Internet matching services, and directory groups before enrollment will assure that lawyers avoid ethical troubles.
1 Out-of-state ethics opinions may be based on rules that differ from California’s and provide guidance only where California does not have a conflicting rule.
2 Rules and Regulations of the State Bar of California Pertaining to Lawyer Referral Services Including Minimum Standards for a Lawyer Referral Service in California, available at http://rules.calbar.ca.gov/LinkClick.aspx?fileticket=mKEKxX4ytUA%3d&tabid=1149 (LRS Rules).
3 LRS Rules, supra note 2, R. 4.1.
4 Hyon v. Selten, 152 Cal. App. 4th 463, 468 (2007).
5 LRS Rules, R. 6.1.
6 Cal. Bus. & Prof. Code §6155(a); Shopoff & Cavallo LLP v. Hyon, 167 Cal. App. 4th 1489, 1521 (2008).
7 LRS Rules, supra note 2, R. 17.1; Cal. Rules of Prof'l. Conduct, R. 1-320(A)(4).
8 Cal. Bus. & Prof. Code §6155(a); LRS Rules, supra note 2, R. 17.1(b).
9 Wash. State Bar Informal Op. 2106 (2006) (site forwarding inquiries to “qualified” attorneys); Ariz. State Bar Ass’n Formal Op. 06-06 (2006) (Web site matching users with attorneys based on areas of practice).
10 Tex. Prof'l. Ethics Comm. Op. 573 (2006).
11 S.C. State Bar Op. 01-03 (2000); Tex. Prof'l. Ethics Comm. Op. 573 (July 2006).
12 S.C. State Bar Op. 01-03 (2000); Wash. State Bar Inform. Op. 799 (2006).
13 Tex. Prof'l. Ethics Comm. Op. 573 (2006).
14 Cal. Bus. & Prof. Code §6157.4.
15 LRS Rules, supra note 2, R. 13.3.
16 See, e.g., Ariz. State Bar Ass’n Formal Op. 06-06 (2006).
17 Cal. Rules of Prof’l. Conduct R. 1-320(A)(4).
18 Cal. Rules of Prof’l. Conduct R. 1-320(A).
19 Cal. Rules of Prof’l. Conduct R. 1-320(B).
20 Cal. Rules of Prof’l. Conduct R. 1-320(A).
21 Cal. Rules of Prof’l. Conduct R. 1-320, Discussion.
22 Cal. Bus. & Prof. Code §6157(c), (d).
23 Cal. Bus. & Prof. Code §6158.5.
24 Vapnek, et al., California Practice Guide on Professional Responsibility, §2:536.1 (2013).
25 Cal. Bus. & Prof. Code §6157.1; Cal. Rules of Prof’l. Conduct R. 1-400(D).
26 Cal. Rules of Prof’l. Conduct R. 1-400(B), (C).
27 Cal. Rules of Prof’l. Conduct R. 1-400(D)(6).
28 N.J. Ethics Op. 43 (2011).
30 Id. (Web site designed to refer users to one attorney selected exclusively based on zip code must disclose the fact that participation is limited to one paying attorney per geographic area); N.Y. State Bar Ass’n Prof. Ethics Opn. 799 (2006).
31 Ky. Bar Ass’n Op. E-429 (2008); Ariz. State Bar Ass’n Formal Op. 06-06 (2006).
32 Ky. Bar Ass’n Op. E-429 (2008).
33 S.C. State Bar Op. 01-03 (2010); N.J. Ethics Op. 43 (2011).
34 Ariz. State Bar Ass'n. Formal Op. 0606 (2006); Tex. State Bar Ass’n. Ethics Op. 573 (2006).
LACBA's Professional Responsibility and Ethics Committee welcomes new inquiries from LACBA members regarding ethical issues or concerns about professional responsibilities. The identity of the inquirer is kept confidential within the committee. The committee, however, does not publish formal opinions that are the subject of any pending litigation involving the inquirer. If you have an ethical question that you would like the committee to consider, you can mail your written inquiry to Los Angeles County Bar Association, Professional Responsibility and Ethics Committee, P.O. Box 55020, Los Angeles, CA 90055-2020, or e-mail your inquiry marked “Confidential” to Member Services at email@example.com.